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The DCIT, Central Circle-31, Room No.319, E-2, ARA Centre, Jhandewalan Extn. New Delhi. vs. M/s. Sutlej Agro Products Ltd., 30, Community Centre, Saket, New Delhi.
February, 07th 2019
        IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCHES "G" : DELHI
 BEFORE SHRI BHAVNESH SAINI, J.M. & SHRI O.P. KANT, A.M.
               ITA.No.294 & 295/Del./2015
         Assessment Years 2011-2012 & 2012-2013

The DCIT,                        M/s. Sutlej Agro Products
Central Circle-31,               Ltd., 30, Community
Room No.319, E-2,           Vs   Centre, Saket, New Delhi.
ARA Centre, Jhandewalan          PIN ­ 110 088.
Extn. New Delhi.                 PAN AAACS4232K
        (Appellant)                      (Respondent)

                For Revenue : Shri S.S. Rana, CIT-D.R.
                               Shri Amol Sinha And
                For Assessee : Shri Ashvini Kumar,
                                     Advocates

             Date of Hearing : 31.01.2019
     Date of Pronouncement : 06.02.2019

                          ORDER

PER BHAVNESH SAINI, J.M.

         Both the appeals by Revenue are directed against

the Common Order of Ld. CIT(A)-XXXIII, New Delhi, Dated

29th September 2014, for the A.Ys. 2011-12 and 2012-13 on

the following common ground of appeal.


     "On the facts and in the circumstances of the case, the
     Ld. CIT(A) has erred in holding that unaccounted
     investment in property cannot be computed on the basis
     of market valuation by Registration Authority."
                               2
                           ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                             Products Ltd., New Delhi.


2.        Briefly the facts of the case are that original

return of income was filed for both the years on 11th

November 2013 and 30th September 2009 which was

processed under section 143 of the Income Tax Act,1961.

Subsequently, a search action under section 132 of the

Income Tax Act was carried out in the case of M/s. Aakriti

Hotels Private Ltd., and M/s. Jaguar Buildcon Pvt. Ltd., at

Community Centre, Saket, New Delhi on 22nd November

2011. During the course of search proceedings, certain

documents belonging to the assessee-company were seized.

The A.O. recorded the satisfaction under section 153C of the

Income-Tax Act, 1961 and proceeded against the assessee-

company. During the course of search proceedings, sale

deed was seized and on perusal of the same, it was noticed

that during the year under assessment i.e., 2011-12, the

assessee-company has purchased a property i.e., Plot No.3,

Sector-4, Noida from M/s B.K. Resorts vide sale deed Dated

31st March, 2011. It was further noted that as per the sale

deed,   sale   consideration       has   been    mentioned         at

Rs.1,68,64,103/- whereas the market value as per the
                                 3
                            ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                              Products Ltd., New Delhi.


Registering   Authority    for       the   said     plot      is    of

Rs.10,55,80,000/- on which stamp duty has been paid.

Similarly in the A.Y. 2012-13, sale deed was found during

the course of search, which revealed that assessee-company

has purchased a property i.e., Plot No.4, Sector-4, Greater

Noida from M/s. Sir, Biotech India Ltd., vide sale deed dated

9th May 2011. It was noticed that as per the sale deed, the

sale consideration has been mentioned at Rs.8,07,15,000/-,

whereas as per the market value as per the Registering

Authority for the said plot is of Rs.32,42,50,000/- on which

stamp duty has also been paid. The assessee-company was

requested to explain why the difference in the sale

consideration may not be added to the income considering

the same as unexplained investment in the above assets.

The assessee-company explained that it has purchased the

property on a consideration mentioned in the sale deed and

has not paid anything more than that. The assessee-

company came to know that on that valuation of the

property as per stamp duty has been made at higher

amount. The A.O. however did not accept the contention of
                                  4
                                ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                                  Products Ltd., New Delhi.


the    assessee-company         and    made       the     addition      of

Rs.8,87,15,897/- and Rs.24,25,35,000/- on account of

unexplained investment in the hands of the assessee-

company in both the assessment years under appeals and

computed the income accordingly under section 153C of the

Income Tax Act, 1961. The assessee-company challenged

the assumption of jurisdiction under section 153C of the Act

as well as additions on merit before the Ld. CIT(A). The

written submissions of the assessee-company is reproduced

in    appellate    order   in   which      the    assessee-company

reiterated the same facts as were submitted before the A.O.

It was further submitted that the conclusion drawn by the

A.O. is not supported by Law. No addition can be made to

the declared income unless the A.O. established that the

assessee had paid over and above the value declared in the

sale deed. The A.O. has not brought any material on record

to justify the additions. In the absence of any material on

record, no addition could be made against the assessee-

company.     The    assessee-company         relied     upon     several

decisions in support of the contention. The Ld. CIT(A)
                                    5
                                 ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                                   Products Ltd., New Delhi.







accepted the explanation of the assessee-company and

deleted the addition. His findings in appellate order in para

5.3 of the order is reproduced as under.

     "5.3. Decision :

                 I have considered the assessment order,

     written submission and the argument of Ld.AR. The sole

     basis of addition is that the market value of the

     properly No. 7, BZP Area, Greater Noida purchased by

     the   appellant     as   per       registration   authority     was

     Rs.8,94,22.900/- where as consideration paid by the

     appellant     was    only      Rs.1,30,00,000/-.          The     Ld.

     assessing officer has treated the balance as under

     valuation of the property. There is no provision under

     I.T. Act for making addition for undervaluation of

     property in the hands of the purchaser. At the most, this

     addition can be taken an unaccounted investment in

     property. As Unexplained investment in the property is

     made as if the balance was paid out of books. Ld. AR's

     main argument is that there is no evidence of

     unaccounted payment in the said property. Purchaser &
                            6
                          ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                            Products Ltd., New Delhi.


seller have agreed to sale the property at lower rate

compared to market value as per the registration

authority. Valuation as per the registration authority is

only intended to collect stamp duty for sale purchase

transaction.

       Considering the entire facts & circumstances of

the case, I agree with the arguments of Ld.AR that

unaccounted        investment    in   property       cannot      be

computed      on   the   basis   of   market      valuation      by

registration authority. For computing capital gain, such

valuation can be taken as deemed consideration by

virtue of specific deeming provision contained in section

50C of I.T. Act., in the hands of the seller. There is no

such deeming provision for computing unaccounted

investment u/s 69B or undervaluation of property. No

evidence was gathered by the assessing officer which

establishes    payment      outside     books      of    account.

Therefore, I hereby delete the addition made on account

of    unaccounted         investment/undervaluation               of

Rs.8,87,15,897/- and Rs.24,35,35,000/- made in the
                                 7
                               ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                                 Products Ltd., New Delhi.


       assessment order for A.Y. 2011-12 and A.Y. 2012-13

       respectively.   These   grounds      of   appeal      for   both

       assessment years are allowed."

3.          Learned DR relied upon the order of the A.O.


4.          On the other hand, Learned Counsel for the

Assessee reiterated the submissions made before the

authorities below and relied upon the following decisions.


4.1.        Order of ITAT, Delhi-C Bench, Delhi in the case of

ITO vs. Fitwell Logic System (P.) Ltd., reported in (2010) 1

ITR (T) 286 (Del.) in which it was held as under :


            " H e l d that, there was no evidence or material

            brought on record by the Assessing Officer to show

            and establish that the assessee had made actual

            investment to the extent of Rs. 1,34,79,780 being

            valuation for the purpose of stamp duty as against

            Rs.1,25,00,000 shown in the sale deed. As such

            the addition was to be deleted."
                                8
                              ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                                Products Ltd., New Delhi.


4.2.      Order of ITAT, Delhi-F Bench, Delhi, in the case

of ACIT, Circle-32(1), New Delhi vs. Rakesh Narang (2015)

64 taxmann.com 332 (Delhi-Tribu.) in which it was as

under :

          "In case of purchase of property by assessee, in

          absence of any positive material on record, mere

          higher value of property estimated by DVO or

          Registered valuer could not form basis for making

          addition under section 69B

          Section 56(2)(vii) is applicable on cases in which

          individual or HUF receives immovable property on

          or after 1-10-2009 and, therefore, where property

          was purchased by assessee in financial year

          2007-08, mandate of section 56(2)(vii) could not be

          applied retrospectively

          Substitution of 'full value of consideration received'

          with 'stamp value' in terms of section 50C is

          applicable only in hands of seller of property who

          has to compute capital gain under section 48

          pursuant to transfer of a capital asset."
                               9
                            ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                              Products Ltd., New Delhi.


4.3.      Order of ITAT, Ahmedabad B-Bench, Ahmedabad

in the case of ITO, Ward-4(3), Ahmedabad vs. Harley Street

Pharmaceuticals Ltd., reported in (2010) 6 ITR (T) 182

(Ahmedabad) in which it was held as under :


          "Section 50C, read with sections 69 and 69B of the

          Income-tax Act, 1961 ­ Capital gains - Special

          provision for full value of consideration in certain

          cases ­ Whether section 50C creates a legal fiction

          for taxing capital gains in hands of seller and it

          cannot be extended for taxing difference between

          apparent consideration and valuation done by

          stamp    valuation       authorities   as    undisclosed

          investments under sections 69 and 69B - Held,

          yes."


4.4.      Judgment of the Hon'ble jurisdictional Delhi High

Court in the case of CIT, Delhi-1, Delhi, vs. Agile Properties

(P.) Ltd., (2014) 225 Taxman 107 (Del.) (HC) in which it was

held as under :
                               10
                              ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                                Products Ltd., New Delhi.


          "In absence of any positive evidence on record,

          addition   cannot      be    made       on    account       of

          undisclosed    investment        in    property       merely

          placing reliance upon report to DVO."







4.5.      Judgment of the Hon'ble jurisdictional Delhi High

Court in the case of CIT vs. Puneet Sabharwal (2011) 338

ITR 485 (Del.) (HC) in which it was held as under :


          "In order to make addition under section 69B,

          opinion of DVO per se is not sufficient and other

          corroborated evidence is required."


4.6.      Learned Counsel for the Assessee also submitted

that since the assessee-company is a purchaser of the

property and no material have been brought on record for

proving that assessee-company made any payment over and

above what is recorded in the sale deed, therefore, no

addition could be made against the assessee-company.

There is no provision under the Income Tax Act, for making

addition for undervaluation of the property in the hands of

the purchaser. He has submitted that later on Section
                              11
                             ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                               Products Ltd., New Delhi.


56(2)(x) have been inserted into the Income Tax Act with

effect from 01.04.2017 to deal with such situation which

would not be applicable to assessment years under appeals.


5.        We have considered the rival submissions and do

not find any justification to interfere with the Orders of the

Ld. CIT(A) in deleting the additions. It is not a denying fact

that Section 50C is applicable in the case of the seller of the

property to take into consideration the valuation of the

property as per the value adopted by the Registration

Authority. However, there is no provision under the Income

Tax Act to deal with such situation in respect of the

purchase of the property. Section 56(2)(x) of the Income-Tax

Act was inserted into the Act with effect from 1st April 2017

to deal with such situation. However, it is well settled Law

that   substantive    provisions    could      not     be     applied

retrospectively. There is no other material brought on record

to justify the conclusion that assessee-company made

unaccounted investment in purchase of the property. In the

absence of any evidence on record to justify unaccounted

payment for purchase of the property, the Ld. CIT(A) was
                              12
                            ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
                                              Products Ltd., New Delhi.


justified in deleting the additions. The A.O. did not gather

any evidence to establish that payments were made by the

assessee-company outside the books of account. The

decisions relied upon by the Learned Counsel for the

Assessee are squarely apply to the conclusion of the Ld.

CIT(A). We, therefore, do not find any merit in both the

appeals of the Revenue. Both the appeals of the Revenue are

dismissed.


6.        In   the   result, appeals    of the      Revenue are

dismissed.


          Order pronounced in the open Court.


      Sd/-                           Sd/-
     (OP KANT)                      (BHAVNESH SAINI)
ACCOUNTANT MEMBER                   JUDICIAL MEMBER
Delhi, Dated 06th February, 2019
VBP/-
Copy to
1. The applicant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `G' Bench, Delhi
6. Guard File.
                     // BY Order //


      Assistant Registrar : ITAT Delhi Benches : Delhi.

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